Speaker 1: Bloomberg Audio Studios, Podcasts, radio News.
Speaker 2: This is the Bloomberg Surveillance Podcast. I'm Paul Sweeney along
Speaker 2: with Tom Keene. Join us each day for insight from
Speaker 2: the best in economics, geopolitics, finance, and investment. You can
Speaker 2: also watch the show live on YouTube. Visit the Bloomberg
Speaker 2: Podcast channel on YouTube to see the show weekday mornings
Speaker 2: from seven to ten Eastern Remarked Global headquarters in New
Speaker 2: York City. Subscribe to the podcast on Apple, Spotify, or
Speaker 2: anywhere else you listen, and as always on Bloomberg Radio,
Speaker 2: the Bloomberg Terminal, and the Bloomberg Business Apps. Checking with
Speaker 2: Jay Haffield.
Speaker 3: He's plays in this part of the rod a lot.
Speaker 2: Jay Haffield is CEO, founder and portfolio manager at Infrastructure
Speaker 2: Capital Advisors. Jay, I know your long career, You've long
Speaker 2: looked at, invested in thought about China. What do you
Speaker 2: make of some of the recent moves by this Chinese
Speaker 2: government to try to reinvigorate its economy.
Speaker 4: Well, we've actually been more op a mystic about the
Speaker 4: Chinese economy for a while for really two reasons, and
Speaker 4: that is that, first of all, everybody ignores the fact
Speaker 4: they save forty five percent of their GDP. We talked
Speaker 4: to you folks who are talking about that, do we No,
Speaker 4: we do not do that my personal account when we
Speaker 4: were talking about or you were talking about before, you know,
Speaker 4: our fiscal irresponsibility. So we save about twenty percent of
Speaker 4: our GDP China forty five. They can invest that badly,
Speaker 4: like say ten percent and get a five percent growth.
Speaker 4: So everybody kind of ignores that focus just on property.
Speaker 4: But we've also been thought actually that this would occur
Speaker 4: because there's one and really only wanted advantage of a
Speaker 4: centralized economy. That is, if you have a crisis, you
Speaker 4: don't have to have Congress arguing about it and saying
Speaker 4: it's a bailout. It's just a bailout, and it happens
Speaker 4: big and anybody complains, you know how plays consequences. So
Speaker 4: when they decided to deal with this, which is just
Speaker 4: I guess a week ago, you get this kind of
Speaker 4: power rally. I noticed a CSI is on. We have
Speaker 4: nine percent, so it's cooling off a little bit for
Speaker 4: the days. But so that's the key is a lot
Speaker 4: of money to put to work and a powerful central
Speaker 4: government that can solve the problem and also pretty tight
Speaker 4: monetary policy up until now, so it's not like they've
Speaker 4: been super loose and now getting even looser.
Speaker 3: You know, I talk about a crisis. I'm very curious
Speaker 3: about why this moment as we head into this holiday,
Speaker 3: but why they decided to do this now? And then
Speaker 3: you talk about that savings rate and we're well acquainted
Speaker 3: with the kind of property crisis we've seen across the country.
Speaker 3: How difficult is it going to be for them to
Speaker 3: change what are here kind of economic and cultural habits
Speaker 3: of the country to get them to spend more and
Speaker 3: to deal with this property crisis.
Speaker 4: Well, I think that actually it all came from policy
Speaker 4: in the first place. It's really a crackdown on wealthy,
Speaker 4: influential people, which the party thought was a threat to
Speaker 4: their power, and so they just were running with that,
Speaker 4: and then at some point they realize, oh, yeah, that's right,
Speaker 4: people do care about economic growth, or we do care,
Speaker 4: so we have to come back to that. So it's
Speaker 4: really just authoritarian flip flop.
Speaker 2: So how does a politics figure into this, because I mean,
Speaker 2: I would think that the Chinese economy really cannot fully
Speaker 2: recover without really aggressive trade with the rest of the world.
Speaker 2: How do they think about the US and the rest
Speaker 2: of the West in terms of trade, because it just
Speaker 2: seems like if you just provide some stimulus, that's not
Speaker 2: going to get it done well.
Speaker 4: I would still go back to if you've saved forty
Speaker 4: five percent, you can paper over a lot of problems.
Speaker 4: And so there is going to be pressure from additional
Speaker 4: trade restrictions, particularly if Trump becomes president. But it's important
Speaker 4: to note that if you have a physical and monetary
Speaker 4: policy firing, you can deal with a lot of the
Speaker 4: problems on the trade front.
Speaker 3: You mentioned if Trump wins. Let me just get your
Speaker 3: perspective on the election here in the US and sort
Speaker 3: of how you're thinking through what may or may not
Speaker 3: happen to hear in the next couple of six weeks.
Speaker 3: Six weeks to go here, and there's a lot between
Speaker 3: now now and then. How are you framing or thinking
Speaker 3: about the election and the impact it's going to have globally.
Speaker 4: We're not far off from your prior guests. Maybe we
Speaker 4: get there a little bit differently. We're not polsters, so
Speaker 4: we look at gambling ons as are sort of markets.
Speaker 4: If you look at the chumulated probabilities, you get the
Speaker 4: same close to the same result as your prayer guests.
Speaker 4: Twelve percent chance of a Republican sweep, eight percent democratics,
Speaker 4: or it's eighty percent. Eighty percent is good in our situation.
Speaker 4: Our political situation, you want divided government. Each side kind
Speaker 4: of fights the other spending, so you have less spending,
Speaker 4: less change. We don't want an increase in corporate taxes.
Speaker 4: That's a terrible economic policy and it's terrible for stocks.
Speaker 4: So democratic sweep, irrespective of politics, wouldn't be good for
Speaker 4: the stock market in the short run. You get a
Speaker 4: lot of capital gains harvesting, which we normally don't get,
Speaker 4: so you would get a really weak market and a
Speaker 4: democratic sweep. Case it's only eight percent, so we're focused
Speaker 4: on the eighty And we still have a six thousand target,
Speaker 4: which looks too conservative right now, but we're not going
Speaker 4: to raise it because it's already pretty aggressive. It's twenty
Speaker 4: one and a half times next year's earnings.
Speaker 1: Thirty seconds left.
Speaker 4: You still like the banks we do, We think you
Speaker 4: should be out on the risk curve, so that's banks reads.
Speaker 4: Tech is probably going to underperform on the fixed income side.
Speaker 4: Preferred stocks are likely to continue to do well. They've
Speaker 4: been doing really well, so take more risks, go out
Speaker 4: on duration because all these global rate cuts are very
Speaker 4: powerful and drive global rates lower.
Speaker 2: Next time you walk in the studio, just say preferred stock,
Speaker 2: and we're gonna do a whole semeon referred stock because
Speaker 2: we never talk about stocks. Yes, it remind me because
Speaker 2: I used to make a lot of money selling those
Speaker 2: things back in the day, and nobody talks about them anymore.
Speaker 2: I guess I know interest rates is zero forever. So
Speaker 2: j Hatfield, CEO, founder and portfolio manager Infrastructure Capital Management,
Speaker 2: appreciate coming in studio. Talk to your public relations persons
Speaker 2: about timing that holding. So anyway, Henrietta tres Joints is
Speaker 2: managing partner in Vada Partners. Henrietta, what moves the needle
Speaker 2: if anything between now in November?
Speaker 1: Fifth, great question. We really only have one predictable event
Speaker 1: left and that is tomorrow night's vice presidential debate between
Speaker 1: Jadie Bance, who is currently over ten points underwater in
Speaker 1: the favorability ratings scale, and Tim Waltz, who is ahead
Speaker 1: by about three and a half points. So I'm expecting
Speaker 1: a more of attention on turning out the vote as
Speaker 1: opposed to specific policy prescriptions out of the ninety minute
Speaker 1: to bate tomorrow night, I imagine they're going to try
Speaker 1: to not just reach voters for watching in real time,
Speaker 1: but all the ones who will catch up the next
Speaker 1: day on social media with the memes and everything. That
Speaker 1: I'm anticipating is really just expecting a meme worthy event
Speaker 1: more than a policy heavy event.
Speaker 3: A meme worthy event, Henriette, how much does this debate matter?
Speaker 3: I think back on past vice presidential debates and more
Speaker 3: conventional campaigns often sandwich between presidential debates. Seems like we're
Speaker 3: not going to get another one of those. How much
Speaker 3: does this matter? And let's take each of the two
Speaker 3: candidates in kind, what does each have to do on
Speaker 3: stage tomorrow here in New York?
Speaker 1: Yeah? I don't think that. Based off what we saw
Speaker 1: on the first presidential debate, which has a lot more
Speaker 1: at stake, there wasn't a ton of movement in the
Speaker 1: polls following. People did get to learn about Kamal Hyris's
Speaker 1: policies and they were received favorably, and the most memorable
Speaker 1: moment of the night was probably Trump saying, you know,
Speaker 1: eating the cats, eating the dogs, something along those lines
Speaker 1: is more of what I'm expecting to come out. Tim
Speaker 1: Wallas is the most non understood, least known candidate on
Speaker 1: the field versus JD Vance, and so I think that
Speaker 1: there's potential for him to lose vote share and see
Speaker 1: that plus three percent favoritability rating drop. That's usually what happens,
Speaker 1: people like you less after a debate than they saw
Speaker 1: you before. That's not the case that we saw with
Speaker 1: Kamala Harris. But there is a lot of room for
Speaker 1: Waltz to go in either direction, whereas JD Vance's numbers
Speaker 1: are pretty baked in and then been very consistently underwater
Speaker 1: since he got into the race. Negative ten, negative thirteen
Speaker 1: and thereabout. So I think jd Vance is the most
Speaker 1: to gain tomorrow night, and Tim Watz is at risk
Speaker 1: of becoming more well known and then therefore less popular.
Speaker 1: So that's probably the starting point I'm going to go
Speaker 1: into it with Henrietta.
Speaker 2: I saw over the weekend that Kamala Harris raised fifty
Speaker 2: five million dollars in California fundraisers. Does that even matter anymore?
Speaker 2: I mean, I just don't know how you appeal to
Speaker 2: those five to ten to fifteen million voters that suppose
Speaker 2: are going to decide this thing.
Speaker 1: Yeah, I was actually just looking at the numbers and
Speaker 1: I have to read them a couple of times. The
Speaker 1: Harris Waltz campaign raised two hundred and eighty seven million
Speaker 1: dollars in August versus eighty five million for the Republican ticket.
Speaker 1: There is this huge deluge of an enthusiasm represented by
Speaker 1: these numbers. But what I would anticipate and what I
Speaker 1: focus on a lot, because I think it's more important
Speaker 1: for the tax bill is where that money is being spent,
Speaker 1: and a lot of it is trickling down ballot. So
Speaker 1: you see Republicans now defending Senate seats where they should
Speaker 1: otherwise have no business spending money. States like Texas and
Speaker 1: Florida for example, even Iowa and then you in Nebraska
Speaker 1: would be another example, and then down ballot even further
Speaker 1: on the House side. The Democrats have just expanded the
Speaker 1: map into non swing states, into states and districts where
Speaker 1: maybe Biden one, but maybe Harris is potentially going to
Speaker 1: pick up tiny little pockets in the population. And that's
Speaker 1: her campaign strategy. Go into the suburbs, go into some
Speaker 1: of the rural areas, whether it's in Pennsylvania or North
Speaker 1: Carolina or Georgia and really try to speak to voters
Speaker 1: exactly where they are. So think of the money not
Speaker 1: in terms of what it can do from a big
Speaker 1: picture perspective. You know, everybody's already bought their ad campaigns,
Speaker 1: but think about how it fuels up a gas, fuels
Speaker 1: up the gas for a tour bus for House and
Speaker 1: Senate members to go on tour in their districts. That's
Speaker 1: where all that money's being plowed into, and that's going
Speaker 1: to be the difference between a split ticket excuse me,
Speaker 1: split control of Congress next year, or a suite for
Speaker 1: one party or the other.
Speaker 3: The Harris campaign spending an average of seven and a
Speaker 3: half million dollars a day in August compared with two
Speaker 3: point six million a day Donald Trump hender. You mentioned
Speaker 3: the tax bill. How are you thinking through the likelihood
Speaker 3: of there being significant changes to the tax code. You
Speaker 3: mentioned that debate between Vice President Harris and former President
Speaker 3: Trump in Philadelphia, and we got more economic policy points
Speaker 3: from her on the heels of that. So much of
Speaker 3: this hinges on who's in Congress, what the dynamics there are.
Speaker 3: Walk us through sort of how you're thinking about that
Speaker 3: amidst all this uncertainty at the presidential level. Looking, how
Speaker 3: should we interpret what these two candidates are saying about
Speaker 3: taxes in light of the fact that they're going to
Speaker 3: have limited power to do much without Congress.
Speaker 1: Well, I'm going to be kind of aggressive here and
Speaker 1: say the two sides are not far apart at all,
Speaker 1: and the election outcome I think is going to be
Speaker 1: pretty easy to translate to tax policy. Here's why. If
Speaker 1: Trump wins with ninety percent odds, I anticipate he'll have
Speaker 1: a Republican Senate and with sixty percent odds they'll have
Speaker 1: a Republican House, So that's one party control. All of
Speaker 1: the tax peds will be extended at their current rates.
Speaker 1: I do not think the corporate tax rate will drop,
Speaker 1: there are not enough votes for that. The United States
Speaker 1: set at the salt cap will go to twenty k
Speaker 1: or thereabouts. We will not repeal the IRA tax credits
Speaker 1: for manufacturing, et cetera, et cetera. On the Democratic side,
Speaker 1: if Kamala Harris wins, I still have ninety percent ods,
Speaker 1: the Senate is going to be Republican. What happens in
Speaker 1: that universe exactly what happened in twenty ten, you get
Speaker 1: a two year extension of all the existing tax breaks
Speaker 1: for every income bracket. You raise salt to maybe forty
Speaker 1: sixty K, you provide a child tax credit which is
Speaker 1: in about another trillion dollars, and you maintain all the
Speaker 1: IRA tax credits. That's going to be your bill of
Speaker 1: Kamala Harris wins. The idea where Democrats have a sweep
Speaker 1: control is only a ten percent prospect in my opinion.
Speaker 1: So effectively, what I'm saying is, no matter what happens
Speaker 1: at the top, you're going to get a two year
Speaker 1: extension at a minimum of all the existing tax breaks.
Speaker 1: That's a blueprint that we've had all year long. It's
Speaker 1: not that confusing. It seems really clear to me. So
Speaker 1: that's what I'm expecting next year. We'll deal with the
Speaker 1: debt ceiling first, and we'll send the second half of
Speaker 1: the year on taxes. Pass it in late December, and
Speaker 1: everything will be extended for two years out of minimum.
Speaker 3: No equivocating their pall.
Speaker 2: I mean, that's why Henrietta is the best. I mean,
Speaker 2: I mean, it makes it pretty clear here Henrietta. I mean,
Speaker 2: from a political perspective, does anybody care about the debt
Speaker 2: and the deficits and things like that, or from a
Speaker 2: political perspectives, that just the third rail and there's no upside.
Speaker 1: They sure don't, you know, you look at the policies
Speaker 1: that have been enacted, not just since COVID, but going
Speaker 1: back as I went back to twenty ten. There's just
Speaker 1: not a concern about the deficit and federal spending right now.
Speaker 1: I have this conversation a lot with foreign clients where
Speaker 1: they're saying, you know, surely America is going to get
Speaker 1: learned about this, and then you come over to the States,
Speaker 1: and American investors do not follow this nearly as much
Speaker 1: as overseas investors. And I can promise you that in
Speaker 1: a campaign, an electioneer, Democrats and Republicans are not thinking
Speaker 1: about on Capitol Hill, the scenario where Harris wins and
Speaker 1: we get a two year extension of everything means that
Speaker 1: in that interim two years twenty six and twenty seven,
Speaker 1: we have another round of fiscal negotiations around as Simpson
Speaker 1: Bulls asked, bipartisan deficit reduction compromise, And unfortunately, I'm going
Speaker 1: to default to the base case, which is that even
Speaker 1: after those commissions are organized, nothing changes.
Speaker 3: We see Donald Trump heading back to Wisconsin. He was
Speaker 3: there last week. He's going to go there again on
Speaker 3: Tuesday after a stop in Georgia. Kamala Harris out in
Speaker 3: California then in Las Vegas. She's going to go visit
Speaker 3: FEMA headquarters today. After what happened over the weekend with
Speaker 3: the storm in the southeast. What would you if you
Speaker 3: were running these two campaigns. We know what the swing
Speaker 3: states are, the five six swing states. What would you
Speaker 3: be prioritizing at this point? It's interesting, just kind of
Speaker 3: divine based on their travel where these campaigns think they
Speaker 3: need to be spending the most time. You talked about
Speaker 3: Pennsylvania a little while back. It seems like that is
Speaker 3: the magnet that is drawing them back to Pittsburgh over
Speaker 3: and over and over again. Where should they be focusing
Speaker 3: on this point? And how resonant do you think their
Speaker 3: message is when you look at that kind of granular level, you.
Speaker 1: Know, instead of repeating something that is very fair but
Speaker 1: often stated by people watching the polls, Pennsylvania's critical. The
Speaker 1: money that Harris has raised allows her to, you know,
Speaker 1: juice up a tour bus and go to the different
Speaker 1: suburbs and rural areas of Pittsburgh and the outlying areas
Speaker 1: and really turn out her margins where possible there but
Speaker 1: to tie into the hurricane those the hurricane went straight
Speaker 1: through a Republican voter war path and it is decimated
Speaker 1: huge swasps of the country in that exact area. I
Speaker 1: think that the Trump campaign should spend a lot of
Speaker 1: energy talking about mail and balloting to those voters who
Speaker 1: don't have the infrastructure and will you know, will be
Speaker 1: busy rebuilding their homes and maybe not available to give
Speaker 1: a vote on the first Tuesday in November because of
Speaker 1: the destruction that the hurricane is. I would spend all
Speaker 1: my resources on shoring up those boats that are already
Speaker 1: locked in for the Trump campaign but now are very
Speaker 1: much at risk of just not showing up because of
Speaker 1: the destruction that just occurred.
Speaker 2: Wow, all right, Henriette, I think I appreciate your tying
Speaker 2: all that in for us. Henrietta Treds managing partner Veta
Speaker 2: Partner's Boy. From my perspective, usually is nobody better and
Speaker 2: kind of bringing it all to the front. Here. Looks like
Speaker 2: we're going to have some labor strife on the eastern
Speaker 2: docks here in ports along the East Coast and Gulf here.
Speaker 2: It just doesn't seem like these two sides are making
Speaker 2: any leeway or any headway in terms of these discussions.
Speaker 2: Get the latest reporting from Danny Berger. She's a host
Speaker 2: of Bloomberg Television. Danny, I see you stand and there
Speaker 2: are folks on YouTube can see you standing at a
Speaker 2: dock somewhere that is ground zero for these discussions. What's
Speaker 2: the latest reporting.
Speaker 5: I'm at one of the busiest docks. I'm in Newark,
Speaker 5: and docks like this have been preparing for a strike
Speaker 5: at the strike of midnight tonight. They've been extending hours
Speaker 5: because by all accounts, this will go ahead. There are
Speaker 5: no current talks scheduled between the Longshoreman Association, that is
Speaker 5: the union that represents the Eastern and Gulf ports and
Speaker 5: the employers. There are two main disagreements that this is over.
Speaker 5: One is about pay. They want a significant pay rise
Speaker 5: from eighty percent over the next six years. The current
Speaker 5: offer on offer, they say, is stingy. The second thing
Speaker 5: they want is they do not want automation. They want
Speaker 5: things written into the contract that says that there will
Speaker 5: not be more automation on the docks, akin to what
Speaker 5: we have in Asia. In Amsterdam, now, the workers here,
Speaker 5: they do have significant leverage at this moment. For one,
Speaker 5: they have an administration that is friendly to labor, and
Speaker 5: they also have a supply demand issue. There are not
Speaker 5: enough people who want to do these jobs, so they
Speaker 5: have the kind of leverage that, ironically, in the first place,
Speaker 5: is why so many of these docs want to automate
Speaker 5: a lot of these jobs.
Speaker 2: So what's the latest here, Danny? Where are these two sides?
Speaker 2: I mean, this sounds like they're not even close here.
Speaker 2: What are the next steps really?
Speaker 5: So they are far apart. You're completely correct, they're so
Speaker 5: far apart that there are no talks that are scheduled
Speaker 5: for this moment. Some of the steps that we have
Speaker 5: seen that's kind of occurring in the background is the
Speaker 5: administration trying to mediate this. Again, the administration is in
Speaker 5: a catch twenty two. They want the union support, so
Speaker 5: they don't want to step in and prevent this strike
Speaker 5: from happening, but at the same time they don't want
Speaker 5: the economic damage. So the strike will happen twelve oh
Speaker 5: one am on Tuesday, then talks will presumably happen. Now,
Speaker 5: most by most accounts, experts we speak to think that
Speaker 5: this will only last for a few days. There is
Speaker 5: significant pressure here considering the money, the economic impact that
Speaker 5: is at stake. But again the Longshoreman Association say that
Speaker 5: they are ready to quote the head of the long
Speaker 5: Shoreman's Association. He says that a sleeping giant will be
Speaker 5: awakened come tomorrow morning.
Speaker 2: All right, Danni, thank you so much for joining us.
Speaker 2: Danny Berger hooset to Bloomberg Television Live reporting from the
Speaker 2: docks in lovely Newark, New Jersey. I was over in
Speaker 2: the Motherland, over in Ireland last week, seeing the people,
Speaker 2: seeing the family. Apparently the Bank of I mean Japan,
Speaker 2: the PBOC was pretty active last week, David, and I
Speaker 2: think that's good news. It's certainly good news for folks
Speaker 2: that own Chinese stocks like Ali Baba. But what does
Speaker 2: it mean here? Amanda Rabella joins us. She's had of
Speaker 2: x tracker sales us on shore at DWS Group. She
Speaker 2: joins us here in studio. Amanda, thanks so much for
Speaker 2: joining us here. Again, what did you make from the
Speaker 2: PBOC last week and what they're trying to do to
Speaker 2: the Chinese economy here?
Speaker 6: Yeah, absolutely, it's really interesting. China is something that we're
Speaker 6: always speaking about X trackers. So we launched the first
Speaker 6: A shares you know, direct holdings of the China shares
Speaker 6: with the West Nasset Manager almost years ago actually in
Speaker 6: Europe and also in the US as well, and so
Speaker 6: we've now become like the default for that exposure. So
Speaker 6: we were pretty busy to stay the least on Friday
Speaker 6: and actually today as well. PBOC on Tuesday they announced
Speaker 6: a number of stimuli which were then effective as of Friday,
Speaker 6: so we saw a really big jump in the market.
Speaker 6: I think all of us know that China has been
Speaker 6: really out of favor for international investors for the past
Speaker 6: couple of years. In particular, was definitely a darling, but
Speaker 6: I would say post pandemic has never really kind of
Speaker 6: got back to where it was. Obviously, we've seen the
Speaker 6: cut in projections regarding the target GDP growth that the
Speaker 6: government has been expecting historically was around six and a
Speaker 6: half percent came to about five percent. But there's been
Speaker 6: a lot of cynicism from Western asset managers western investors
Speaker 6: over the past couple of years about whether the five
Speaker 6: percent was actually achievable, and so what we saw on
Speaker 6: Friday effective was some changes in rates policy more broadly. So,
Speaker 6: first of all, we saw decreases in the reserve requirement ratio,
Speaker 6: and then we also saw a cut in the seven
Speaker 6: day reserve rate as well. What these two together have
Speaker 6: done is that actually it's injected the Chinese economy with
Speaker 6: one trillion new one which is now available for investment,
Speaker 6: and the market received that pretty well. So we actually
Speaker 6: saw on Friday the market the CSI three hundred increased
Speaker 6: by just shy of four point five percent, and then
Speaker 6: it's closed that over eight percent up on the day,
Speaker 6: which is incredible.
Speaker 3: So being called the PBOC put by exactly people I know.
Speaker 6: I don't think it's over as well, think there's more
Speaker 6: to come.
Speaker 3: Yeah, I'm curious you talk about the sort of investor's
Speaker 3: skepticism that there's been the backdrop to all of this,
Speaker 3: and I wonder how curtive you think these efforts are
Speaker 3: going to be in allaying those concerns. So, given that
Speaker 3: skepticism or fear about the state of the Chinese economy,
Speaker 3: is this in a way alarming?
Speaker 2: Is it?
Speaker 3: Does it in gender more confidence? How do you see
Speaker 3: it sort of playing out? I guess attitudinly, I.
Speaker 6: Think we've seen it as pretty positive. We and also
Speaker 6: are inventure partner Harvests, who are headquartered out of Beijing,
Speaker 6: and so you know, even though they are headquartered out
Speaker 6: of Beijing, they're actually quite measured in terms of their views.
Speaker 6: They're not always massively bullish on China. What's really interesting
Speaker 6: is that, you know, the biggest sector which is always
Speaker 6: under pressure is residential property more broadly, and so these
Speaker 6: two acts and more supportive for the property kind of
Speaker 6: sector overall. What we see as well is that there
Speaker 6: will be more government issuance of treasuries locally, which will
Speaker 6: be kind of basically for funding infrastructure and property exercises
Speaker 6: as well. So we think then that's all positive. There
Speaker 6: was also a repercussion as well for you know, retail
Speaker 6: mortgage rates as well, So again that's supportive from a
Speaker 6: grassroots perspective, and you know, I think US and Harvest
Speaker 6: we expect that there's more to come from a fiscal
Speaker 6: policy perspective as well.
Speaker 2: So you mentioned last week we did get a lot
Speaker 2: of fiscal policy measures very positively received by the marketplace. Again,
Speaker 2: Mike Proxy is just Ali Bobbings. I know that company
Speaker 2: very well, up another three percent today, hitting a fifty
Speaker 2: two week, HI up about fifty percent year to date.
Speaker 2: But still my big issue, and I think for a
Speaker 2: lot of investors issues why China still may be uninvestable.
Speaker 2: I just don't know what the government's going to do.
Speaker 2: Any given day. They can come along and say Tech,
Speaker 2: we don't like you. Yeah, and we're going to enact
Speaker 2: a bunch of policies that are going to impact your business,
Speaker 2: and there's nothing an investor can do. How do you
Speaker 2: view that risk when you talk to clients. I guess
Speaker 2: the geopolitical risk just within China.
Speaker 6: Yeah, so we do think that China. I mean there's
Speaker 6: no right or wrong answer. I mean that's what's making
Speaker 6: markets interesting as well, these diversions in thought. So, you know,
Speaker 6: while we have been speaking about our ASHER and our
Speaker 6: ASHS tickers with investors, for those that are more cynical
Speaker 6: and maybe have a similar view to you, Paul, in
Speaker 6: terms of what other the surprises that can happen, we've
Speaker 6: actually been speaking to investors for coming up to a
Speaker 6: year about a fund that we launched in collaboration with
Speaker 6: Selective and JH. Whitney, which is CRTC. Think of it
Speaker 6: as DMX China. So we always talk about EMX China,
Speaker 6: but it's important to think about DMX China. So for example,
Speaker 6: tech a great example you can think about. Then the
Speaker 6: party is going to say, okay, all government officials, you
Speaker 6: can't have an iPhone, and then you see market cap
Speaker 6: of Apple drop right, and so CRTC. The US National
Speaker 6: Critical Technologies ETFs tracking an index which is ultimately looking
Speaker 6: at economic exposure to China, Russia, Iran which is becoming
Speaker 6: more important as well, and North Korea. So these adversary
Speaker 6: nations from a US and actually more broadly NATO perspective,
Speaker 6: and so you're also then focusing as well on critical technologies.
Speaker 6: So at the same time, it's also tapping into the
Speaker 6: categories which have been identified by the Department of Defense,
Speaker 6: which are going to maintain and even enhance the US
Speaker 6: economy globally. You know, it's really about preservation of the
Speaker 6: US economic standing in the world.
Speaker 3: I'ld be spinning away from China just to international equities broadly.
Speaker 3: How are you feeling about prospects there in light if yes,
Speaker 3: what we've been talking about, certainly what the FED is
Speaker 3: doing as well, how much an APPLA you have for them.
Speaker 6: Yeah, So you know, I think when a lot of
Speaker 6: clients are thinking about the MSCI world. For example, so
Speaker 6: ten years ago, the US used to make up about
Speaker 6: forty percent, then that became forty eight percent, and then
Speaker 6: now it's it's pretty much sixty percent. So everyone has
Speaker 6: got this inherent bias to the US. A lot of
Speaker 6: people thinking is that too much. We've been speaking, you know,
Speaker 6: for pretty much a year now about the mag seven
Speaker 6: and so thinking about diversifying it back into international equities
Speaker 6: is really interesting. We in particular really like Japan right now,
Speaker 6: and we still think that there's a carry component, even
Speaker 6: if the FED has cut rates recently and looks to
Speaker 6: do so further. You know, Japan is always pretty much
Speaker 6: a zero rates environment. But the Japanese economy what's interesting
Speaker 6: is that it's moved away from having, you know, just
Speaker 6: an export focus, and actually the demographics are starting to
Speaker 6: change a little bit. There has been an increase in
Speaker 6: domestic consumption, for example. So this is kind of long
Speaker 6: standing we expect, and we think that gives a broader,
Speaker 6: nice story for all the hedged exposure to MSCI Japan.
Speaker 2: Well, we want to first start on Wall Street. In
Speaker 2: the mid eighties, Japan was the bomb. You had to
Speaker 2: be in Toke. You had to do a tour duty
Speaker 2: there and then we went a generation with nobody you couldn't,
Speaker 2: you know, give it away. I just don't know what's
Speaker 2: changed there. As the economy materially changed, has the government
Speaker 2: policy change? Why are Warren Buffett and people like you
Speaker 2: talking about Japan.
Speaker 6: Yeah, it's a value trade basically, so I think you
Speaker 6: have to have the discipline to stay in it for
Speaker 6: the long haul. You know, we did see some retrenchment
Speaker 6: in the past couple of months, but we think that's
Speaker 6: the long term projection, is that it really makes sense
Speaker 6: on a five year, ten yar perspective.
Speaker 3: I would love to get your perspective on sort of
Speaker 3: where the FED goes from here and how much the
Speaker 3: ground changed after the beginning of this rate cut cycle
Speaker 3: for you and clients as well. Has the perspective shifted
Speaker 3: such that you don't have to play the parlor game
Speaker 3: as much? This is kind of begun and going to
Speaker 3: continue with some momentum, or how much how much focus
Speaker 3: is the FED still taking up in your psychic space?
Speaker 5: Yeah, sure so.
Speaker 6: George Catchrembone, who is the head of our fixed income
Speaker 6: business for the US. You know how some great views
Speaker 6: on this, definitely. I think he's a common, very popular
Speaker 6: guest on your side. What we think is that actually
Speaker 6: gives them an opportunity for credit again, so I think
Speaker 6: that there had been a rotation out of that where
Speaker 6: there had been allocations, it had been more on the
Speaker 6: IG side. But we think that high yield. We've actually
Speaker 6: liked high yield long term, but we just haven't seen
Speaker 6: much in terms of flows into it, and so we're
Speaker 6: definitely thinking it makes sense.
Speaker 2: Now.
Speaker 6: What's really interesting short duration high yield. So shyl is
Speaker 6: Ourtica that's yielding about eight point five percent and the
Speaker 6: duration I think is like one point eight years something
Speaker 6: like that. We've seen default rates come down massively, even
Speaker 6: you know, at the triple C level, so I think
Speaker 6: they've more than halved actually over the last four years,
Speaker 6: so much more robust than we have sorught of it previously.
Speaker 2: Hi Amana, thank you so much for joining us. Always
Speaker 2: appreciate it having a particularly when you come in studio.
Speaker 2: Mana Rebella, she's head of x Tracker Sales US on
Speaker 2: shore for DWS Group, joining us here in studio. This
Speaker 2: is the Bloomberks of podcast, bringing you the best in economics, geopolitics, finance,
Speaker 2: and investment. You can also watch the show live on YouTube.
Speaker 2: Visit the Bloomberg Podcast channel on YouTube to see the
Speaker 2: show weekday mornings from seven to ten Eastern from our
Speaker 2: global headquarters in New York City. Subscribe to the podcast
Speaker 2: on Apple, Spotify, or anywhere else you listen, and as always,
Speaker 2: on Bloomberg Radio, the Bloomberg Terminal, and the Bloomberg Business app.